## Facts

- Buyers contracted to purchase sellers’ cooperative apartment for $545,000, paid a 10% down payment ($54,500) held in escrow by sellers’ attorney.
- The contract set an April 1, 1997 closing date but did not state that time was of the essence and contained no financing contingency.
- The cooperative board approved the transfer on March 25, 1997.
- Buyers could not close on April 1 due to loan-processing delays; buyers requested an adjournment to April 16, and neither side appeared on April 1.
- Sellers agreed to the April 16 adjournment but sent notice stating that time was of the essence for the new date.
- Shortly before April 16, the lender required proof that certain tax liens had been satisfied and then required an updated lien search, causing a short additional delay.
- Buyers communicated the lender-driven delay to sellers and became ready, willing, and able to close on April 23, 1997.
- Sellers declared buyers in default for failure to close on April 16, terminated the contract, and sought to retain the down payment.
- Buyers sued for a declaration that the contract remained in effect and to prevent forfeiture of the down payment.

## Issues

1. Whether, after a non-essence contract closing date is adjourned, a seller may unilaterally make time of the essence for the new date by notice.
2. If so, whether the notice provided buyers a reasonable time to perform under the circumstances.
3. Whether a brief, lender-driven delay coupled with good-faith efforts and no material prejudice to the seller justified termination and forfeiture of the down payment.

## Decision

- The Appellate Division, First Department reversed the trial court.
- The court granted summary judgment to the buyers.
- The court held that the sellers’ time-of-the-essence demand was ineffective because the time afforded to perform was not reasonable under the circumstances.
- The court ordered return of the down payment with interest.

## Legal Principles

- When a real estate contract does not make time of the essence, a party may make time of the essence by clear notice fixing a new closing date only if the other party is given a reasonable time to perform.
- Reasonableness is assessed in context, including timing of required approvals, the cause and length of any delay, the parties’ communications, and good-faith efforts to complete performance.
- A brief delay attributable to lender documentation requirements, promptly cured and causing no material prejudice, does not support termination and forfeiture.
- The absence of a financing contingency does not eliminate the requirement that a time-of-the-essence notice allow a reasonable time to perform and be enforced consistent with good faith.

## Conclusion

The court refused to enforce forfeiture of the buyers’ deposit where the sellers’ post-adjournment time-of-the-essence notice did not allow a reasonable time to close and the buyers’ short, good-faith delay caused no material prejudice to the sellers.


Miller v. Almquist, 241 A.D.2d 181, 671 N.Y.S.2d 746 (N.Y. App. Div. 1st Dep’t 1998)